why are investment bankers forced to build that many models?
Hi I'm a freshman so this may be a stupid question, but why do you need to build a model when the valuation is usually dependent on assumptions? like I know that there are more models than DCF, LBO, etc. but you're not going to reinvent the wheel for every single client so why not just have blueprint models which you fill with the clients financial data ?
Question for you to consider/ponder --- how would you use a standardized model for a company that sells services and also for a company that sells goods/products? Sales and cost structures of the business are completely different.
Almost every company reports numbers differently, find ten random companies from the same sector and the way they report their numbers would be different, eg some include SGA or some separate it, some don't give segment data but backlog data. With the number of adjustments you would need to make, it won't be as different to just creating a new model. Now you could still use a template that has some stuff or formatting laid out for you, but can't really create a blueprint model. Modeling AT&T vs modeling Frontier Comm which are both in the same industry would require different layout.
Almost every company reports numbers differently, find ten random companies from the same sector and the way they report their numbers would be different, eg some include SGA or some separate it, some don't give segment data but backlog data. With the number of adjustments you would need to make, it won't be as different to just creating a new model. Now you could still use a template that has some stuff or formatting laid out for you, but can't really create a blueprint model. Modeling AT&T vs modeling Frontier Comm which are both in the same industry would require different layout.
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